China’s fish

News analysis

The national seafood media was Monday atwitter with speculation China might impose tariffs on American seafood, and Alaska Commissioner of Commerce Mike Navarre was trying to spin the state’s proposed liquified natural gas (LNG) project as some sort of shelter against a looming U.S.-China trade war. 

“The governor’s established a relationship with the Chinese and the ministers in China that maybe will help in what they look to put tariffs on,” Navarre told Anchorage’s KTVA. “If they have an ongoing interest, which they’re showing at this time, in Alaska’s natural gas, it may help us in how they determine what products they’re going to put tariffs on.”

“For now, China appears to be leaving Alaska seafood alone,” added reporter Liz Raines.

There was no “appears” about it. Alaska seafood was not on the list of products with new tariffs announced by the Chinese, and unless the Chinese are really bad businessmen – something of which they have never been accused – Alaska seafood will remain off the list.

Why?

Because China – sometimes with the help of North Korean serfs – has turned Alaska fish into a moneymaker for China. The Chinese would be shooting themselves in the pocketbook by imposing a tariff on Alaska seafood.

China imported about $1.3 billion worth of seafood from the U.S. last year, but it turned around and exported back to the U.S. about $2.8 billion worth of seafood, according to data from the National Marine Fisheries Service.

That’s a net gain of $1.5 billion in favor of the Chinese.

Alaska is responsible for about $880 million of the $1.3 billion in seafood exports to China, according to the Alaska Seafood Marketing Institute (ASMI), which now pegs China as the state’s biggest market. About 35 percent of Alaska seafood ends up in China where much of it is processed before being shipped back to the U.S. for retails sales.

Markets lost

Japan continues to be a big importer of Alaska salmon, but a huge part of that historical market has been stolen by farmed salmon free from the worms common in wild fish. 

Alaska supplied almost 90 percent of Japan’s imported salmon as late as 1989. It’s share was down to less than 20 percent by 2005, according to an analysis by Kieth Criddle at the University of Alaska Fairbanks College of Fisheries and Science.

Blame the Norwegians who pushed fresh salmon into the Japanese market. They invested a decade in convincing the discerning Japanese that it was safe to eat uncooked salmon and began producing a fat-rich salmon the Japanese wouldn’t reject as too lean for sushi. 

As a result, for the sixth year straight, salmon last year ranked as the favorite fish at Japanese conveyor-belt sushi restaurants, according to a survey by seafood processor Maruha Nichiro.

Shifting markets and falling prices linked to a global market takeover by the fish farmers forced Alaska fishing interests to find new ways to compete elsewhere.

New world order

Seeking to drive down costs, they soon focused on China as a go-to processing center for Alaska salmon.

“Most of Alaska’s exports to China consists of frozen H&G (headed/gutted) fish, which are then filleted in China where labor costs are considerably lower,” according to ASMI. There is little doubt this shift to Chinese processing maximized the value for some of the approximately 15,000 people who hold state limited entry permits allowing them to fish commercially.

About a quarter of those permit holders are non-residents, according to the Commercial Fisheries Entry Commission, and the non-residents are concentrated in the most valuable fisheries – the purse seine fisheries in Prince William Sound and Southeast Alaska, and the sockeye salmon gillnet fishery in Bristol Bay.

Gross earnings per permit in the Bay have averaged $90,000 since 2010, according to the Spring 2017 Bristol Bay Regional Seafood Development Association. The fishing season lasts less than two months. 

Since Alaska enacted the limited entry law in 1972 to restrict the number  of commercial fishermen, more than 50 percent of the permits issued to commercial fishermen in Bristol Bay have been sold to fishermen outside of the region, many of them to Lower 48 residents, according to a study by University of Alaska Fairbanks researchers.

Of the $72.7 million (after expenses) earned by limited entry permit holders in Bristol Bay in 2010, only 31 percent stayed in Alaska, according to a report prepared for the Regional Seafood Development Association by the University of Alaska’s Institute of Social and Economic Research (ISER). Almost as much, 26 percent, went south with Washington state fishermen. Residents of Oregon and California near equally split another 8 percent. And 8 percent was spread among residents of other Lower 48 states.

A shift to H&G and shipment to China to have the fish filleted and picked free of pin bones by cheap labor has been good for the fishermen. But the change hasn’t necessarily benefited Alaska, especially rural Alaska.

Minimizing fish handling in-state reduced seasonal job opportunities in Bristol Bay communities with an economic effect that rippled through the region.

The result has been a Bristol Bay resident population in decline for years. It is now down to about two-thirds of what it was in 1990. 

Slave labor

It could be worse. The Associated Press last fall reported that some of the Alaska salmon exported to China was being processed by laborers shipped in from North Korea.

“This means Americans buying salmon for dinner at Walmart or ALDI may inadvertently have subsidized the North Korean government as it builds its nuclear weapons program,” the AP investigation concluded. “Their purchases may also have supported what the United States calls ‘modern day slavery’ — even if the jobs are highly coveted by North Koreans.”

The AP reported North Koreans were paid about $300 a month with anywhere from 50 to 70 percent taken by the Korean government. “It passes on to the workers as little as $90 per month — or roughly 46 cents per hour,” the report said.

It described the work in China as “exhausting, with shifts lasting up to 12 hours and most workers getting just one day off each week. At some factories, laborers work hunched over tables as North Korean political slogans are blasted from waist-high loudspeakers.”

There is no indication of how much Alaska seafood went through the Hunchun, China, plants staffed by slave labor, but one of the products specifically singled out by the AP was “Sea Queen Wild Caught Pink Salmon Fillets.” Those salmon, according to the Marine Stewardship Council, come from various Alaska salmon fisheries, along with fisheries in Russia and British Columbia, Canada.

Bottom feeders

But not all of the fish exported from Alaska to China to be processed and resold back in America is salmon. Some of the seafood exported to China is bottomfish less than desirable in most American markets, but it ends up back in the U.S. anyway.

About 37,000 metric tons of arrowtooth flounder are harvested off Alaska on average, according to an ASMI Analyses of Specialty Alaska Seafood Products. Nearly all of it is exported to China.

A lot of it is then filleted and had been shipped back to be sold at Walmart where it got horrible reviews as an almost inedible product. Walmart has since dropped its old Alaska flounder brand and replaced it with a new brand for which there are no reviews, but the low, $6.18 per pound price for skinless, FZ Flounder Fillets “harvested from the icy cold waters of Alaska” would indicate the new fish might be the same old arrowtooth.

Arrowtooth filets are a crap shoot. Some will cook up fine; most will go to mush.

“Although arrowtooh flounder closely resemble smaller halibut, there is a critical difference in meat quality that results in the former being one of Alaska’s most valuable species and arrowtooth being one of the lowest,” the ASMI report says. “Halibut meat has a dense, white texture….Arrowtooth flounder carry a myxosporean parasite that release a proteolytic enzyme which softens the fish’s flesh upon landing.

“Not all arrowtooth carry the meat-softening parasite, but most do. The only way to
counteract the enzyme is to treat the fish with an additive that partially offsets the enzymatic process, or to keep the fish just above freezing and then cooking quickly under high heat (such as frying). Unfortunately, both practices do not completely fix the enzyme problem, and makes harvest and processing much more costly.”

Arrowtooth flounder doesn’t help to improve the reputation of Alaska seafood. It would probably be good for the reputation of Alaska fish in U.S. markets if the arrowtooth stayed in China, but it doesn’t.

“Arrowtooth flounder is generally exported to China as frozen whole fish….It is then re-exported as frozen fillets or breaded/frozen product to Europe, the U.S., and other markets as a low-cost flounder or whitefish product. Finished arrowtooth fillet product is commonly marketed simply as ‘flounder,’ ASMI reported. “This has caused consumer confusion and disappointment in some cases as fillets containing the flesh-softening enzyme are typically much lower quality than other flounder species.”

That’s something of an understatement.

“We like flounder,” Walmarticus posted in a review of the old Walmart arrowtooth in March of last year. “Local store was out of flounder, so I saw these and figured – why not? Let me tell you why not. RICE has more texture. Mushy, overcooked rice. This stuff after cooking had the same consistency of congealed vomit. It looked good, smelled ok, but had all the taste of mushy, salt free rice cooked in a very light fish broth.”

If China can make money off products like this imported from Alaska and resold, why in the world would it want to restrict those imports?